At retirement, it’s time to begin withdrawing from assets to support your standard of living. Withdrawals may come from retirement accounts (e.g., 401(k), 403(b), and IRA), personal investments (e.g., stocks, bonds, and real estate), and annuities. Money withdrawn might be only investment earnings or a combination of earnings and principal.
#12 of 13 Things People Can Do with Money | by WealthPhase
Continuing recent posts updating The Retirement Cafe's past descriptions of retirement strategies, Dirk Cotton looks again at time-segmentation (TS) or "bucket" strategies...
The Society of Actuaries (SOA) recently released its ninth biennial Risks and Process of Retirement Survey Opens a New Window. , which identified an overall increase in consumers’ level of concern for their finances both prior to and during retirement in 2017.
Sustainable Withdrawal Rate (SWR) strategies are based on the work of William Bengen, whose research uncovered sequence of returns risk. The basis of the strategy is that there is a constant amount of spending from a stock and bond portfolio that would have been “safe” in 95% of historical 30-year periods of stock returns.
In collaboration with the Society of Actuaries, the Stanford Center on Longevity has completed a major study of retirement income strategies that integrates IRAs, 401(k) plans, and home equity. This study has identified a straightforward strategy that can be implemented in virtually any IRA or 401(k) plan, possibly with minimal input from a financial adviser. It’s called the Spend Safely in Retirement Strategy.
Not enough retirement income for a comfortable living? International Living’s Global Retirement Index ranks retirement destinations where retirees’ dollars can go further.
When retirees add up all their deductions and personal exemptions, they may find opportunities to generate the income they need from their portfolios without triggering any federal taxes. Here's how.
Moving out of country is a huge decision. Yet, it can be a way to stretch your retirement income. You can retire well living only on Social Security in these five countries, say the editors of International Living.
Many of these facts and figures will surprise you — and not understanding some of them can endanger your future financial security.
Here are five, often overlooked, ways home equity can be used as a source of retirement income.
A poster child for needless complexity is the required minimum distribution (RMD) rules for IRAs, 401(k)s and similar retirement savings plans funded with pretax dollars.
Although many financial advisors tout the merits of the 4% rule—in which a retiree withdraws 4% of her or his assets in the first year of retirement, adjusting for inflation each year thereafter—there’s often a better way to go. “You want a plan that’s specific to your situation, not one that’s based on a generic rule of thumb."
It's a rule that investors have stood by forever. But if you're near retirement, it might not be right for you now. And the 4% rule? Well, you may want to rethink that one, too!
Social Security income is by no means automatically exempt from taxes. Here's where you'll get taxed at the state level to some degree.
The maximum Social Security benefit is nearly three times what the average retiree receives.
Year end is a good time to make a few key Social Security moves to maximize your retirement benefit. This Motley Fool article provides a few to start with.
Getting ready for retirement is a lot like preparing for a major storm. If you are approaching retirement and clouds are on the horizon, you still have time to protect yourself. Here's how.
Dirk Cotton looks at two problems that are considerations in deciding when to claim Social Security benefits.
Worried about taxes and making your money last through retirement? A qualified longevity annuity contract (QLAC) could be a possibility to consider.
Unfortunately, many seniors think their only option is to lapse or surrender a life insurance policy when the premiums are no longer affordable. Life insurance settlements can be a better economical choice.
For some senior homeowners, it can be a useful retirement tool. However, you should get all the facts before you decide to access your home equity with a reverse mortgage (or suggest one to an aging family member).
The IRS sets guidelines for how you can move your retirement money. Here are 3 Roth IRA withdrawal rules and 3 Roth IRA contribution rules.
One of the main purposes of the QLAC is to help overcome the "longevity problem" -- that is, the fact that many Americans will outlast their retirement savings. A side benefit is that it can reduce your RMD income tax liability.
Dirk Cotton explains that annuities are insurance contracts that you can purchase to provide a stream of income for as long as you live. Think of them as life insurance in reverse.
If you leave the workforce the year you turn 55 or any time thereafter, you can take penalty-free distributions from your 401(k) under the so-called Age 55 Rule.
Inflation can erode purchasing power during retirement. Here's what do to deal with the threat.
As more and more workers approach and enter retirement without the benefit of pensions, the lifetime income stream of Social Security—and the enlarged benefits that can be obtained with savvy benefits-claiming strategies—has received newfound attention.
It will be one of the first thoughts to cross your mind when you need retirement savings to cover your living expenses: Do you liquidate across all your holdings, or do you attempt to choose the optimal asset class? Your withdrawal strategy makes a huge difference in how much money you'll have in retirement.
Even if the financial case for buying an annuity isn't especially compelling, you may still want to own one. The reason is that research shows that people who have annuity-like income in retirement tend to be happier and enjoy their post-career lives more.
Are you sure you're ready for retirement? Ask yourself these questions before you commit.
Many homeowners in or near retirement face a quandary. Their wealth is tied up in their home—two-thirds of the average retiree’s net worth is home equity—yet they’d rather not tap that wealth by selling their house and downsizing. A reverse mortgage might be the solution.
Before retiring abroad, savvy seniors should first carefully lay the financial groundwork to ensure relocation hasn't unexpected costs, financial experts say. Regardless of where you live, your U.S. tax obligations remain the same.
If you're past age 70 1/2, those withdrawals have to start coming out of your tax-sheltered retirement accounts. Are you better off taking your distribution at the beginning of the year, or at the end? Or should you take them throughout the year, the better to fund living expenses and cover quarterly estimated taxes?
Planning an early retirement? This ranking looks at taxes on retirement income, property taxes, health insurance costs and other expenses to find the most economical states for retirees.
Wade Pfau lays out the essential building blocks of the Retirement Researcher retirement income planning philosophy.
In addition to gauging HSA quality, long-term HSA investors need to consider the logistics of managing their HSAs, especially if their plan is to carry the HSA assets into retirement.
While just a handful of so-called retirement income funds are currently available, financial advisors say the lineup of offerings is worth exploring.
Although this is a "sponsored article" by Brighthouse, it provides some interesting insights into retirement income planning.
It's overly simplistic, but it is a starting place for setting capital accumulation goals for retirement. Taxes, inflation, and other factors need to be considered.
In a family with multiple children, a surviving spouse can receive a benefit of as much as 100% of the deceased worker's benefit, and eligible children will get up to 75% of the worker's benefit. Therefore, when there's more than one eligible child, then the family maximum kicks in.
Forbes: A recent New York Times article on reverse mortgages published a common error that feeds into negative misconceptions that continue to hinder using home equity as a strategic retirement income source.
You can use a variety of strategies to decrease the amount of taxes on your investment portfolio and retirement income.
The financial circumstances facing retirees differ dramatically from pre-retirees. For this reason, traditional wealth management approaches do not sufficiently address a retiree’s needs. Wade Pfau has outlined seven financial challenges unique to retirees that must be taken into account when planning for retirement.
In this guest post, Derek Tharp – our new Research Associate at Kitces.com, and a Ph.D. candidate in the financial planning program at Kansas State University – analyzes safe withdrawal rates based on various dynamic spending adjustments retirees could choose to adopt, finding that small-but-permanent strategies are generally both more effective, and realistically implementable, than large-but-temporary spending adjustments.
Are you worried about going broke after you retire? Many fret about longer retirements, fewer pensions, choppy markets, and low savings rates.
Low taxes, access to health care, cultural activities, and crime rates are important, but don't forget social networks and family.
When it comes to helping retirees figure out the financial aspect of their retirement plans, one of the conventions is "income-replacement rate." Morningstar suggests calculating cash flow requirements, instead.
Social Security provides an enormous return for those who are patient.Consider its retirement benefits. You can take them as early as 62 or as late...
Kitces explains how interest, dividends, capital gains, and principal serve as the four pillars of retirement income, and why the traditional "income" approach lost its appeal.
How much money do you need at retirement to generate enough income to maintain your standard of living? J.P. Morgan developed a simplified method to determine if you have currently accumulated enough assets to be on track. It doesn’t replace professional financial planning software, but it can be used to begin the planning discussion.
A life annuity is a contract typically sold by an insurance company to an “annuitant” (often a retiree) guaranteeing periodic payments for as long as the annuitant lives. In retirement planning, we use annuities to mitigate longevity risk, the risk of outliving our retirement savings